RBB needs recapitalisation

The only government-owned commercial bank, Rastriya Banijya Bank (RBB) needs a massive capital injection to stay afloat in the market and compete with modern technology-driven private commercial banks.
Bankers and former chairmen of Rastriya Banijya Bank (RBB) today on the eve of its 44th anniversary highlighted the hits and misses of the bank.
Prithvi Bahadur Pande, chairman and executive officer of Nepal Investment Bank, said that RBB as a complete goverment-owned commercial fianancial institution has its strengths also. "It has the largest branch network -- 137 -- and maximum deposit," he said adding that if it were made more efficient at the decision making level and in customer services it could beat any of the present private banks.
"However, in its present state, it cannot be recapitalised as it needs over Rs 65 billion capital injection," Pandey, one of the pioneers of the country's banking industry, added. The bank's negative networth stands at Rs 15.13 billion and its Non-Performing Assets (NPA) stand at Rs 6 billion. Its total assests stand at around Rs 70 billion.
RBB CEO Janardan Acharya while presenting a paper highlighted the achievements of the bank under the financial reforms programme. "Under the financial reforms programme while the bank has been successful in lowering the NPA, it still is a major challenge to the bank," he said adding that the pay and perks of the employees could not match the private banks and that had lowered the moral of the bank's employees, though they are as capable as those of the private banks.
Acharya also presented a long list of the bank's future strategy. Some experts also suggested lowering the spread rate. Krishnahari Banskota, acting finance secretary (Revenue) and the chairman of the bank accepted the weaknesses on part of the bank and promised to take serious note of them to develop RBB as the number one commercial bank. Banskota, who was appointed RBB chairman on December 3, 2008, also promised to prepare standard operation procedure to increase the bank's credibility.